Most people have played the most known investing board game, Monopoly. It can be a fun game when you are winning or a very frustrating game when you are losing (I am sure most people have experienced these emotions, while playing Monopoly). However, I found a game that has a lot to do with investing but correlates to life a little more and has less luck than Monopoly. When I was reading Robert Kiyosaki’s “Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom” I heard the author talk about his board game he made “Cashflow Get out of the Rat Race!” I instantly looked the game up, read reviews, and decided to purchase the game. It was a little expensive for a board game, around $80.00, but it was well worth the purchase.
The game play was super fun and it was eye opening. You start out in what is called “the rat race,” you start by picking a career card, which dictates the whole game. With your career card, you can then fill out your financial statement. Your financial statement is your outline of profession, income streams, expenses, assets, liabilities, and your monthly cash flow. This portion is very interesting, the careers fluctuate quite a bit, from $1,600 a month to $13,200 a month in income. It may seem that having a higher paying career would give you a leg up in the game, however, with a higher paying career, comes higher expenses (this is to represent the lifestyle of individuals in different wealth categories).
The goal of the game is to “Get out of the Rat Race.” The way to do this is to get your monthly passive income above your monthly expenses. Passive income is income you obtain by way of little to no daily effort to maintain the income. For example, if you have a rental property, which after all expenses, cashflows $200 a month, you would have $200 a month in passive income. In the game you try to buy assets, there are assets you hold, which can appreciate, which you can sell and make a lump some of money on (this allows you to buy more cash flowing assets). Then there are assets you can purchase to give you passive income immediately, such as real estate and businesses. You go around in a circular board trying to reach your goal of your passive income being greater than your expenses. Once you do this, you are financially free, then you enter the fast track.
The fast track is interesting, it makes you think with a different point of view. You no longer are thinking of your assets and liabilities, all you think about now is growing your cashflow. If you have enough money and you think an asset can get you to your cashflow goal, then you purchase it. If you do not have enough money or you think it is a poor deal, you can pass and try to get a better asset the next turn. Whoever reaches their cashflow goal first, wins the game.
What I really liked about this game, was everyone is a winner. If you look at this game as a learning experience and not just a game, there are a lot of takeaways. On your way to getting out of the rat race, you go over many hurdles. You can have unexpected expenses, such as kids or purchases that get you farther from your goal of having monthly passive income above monthly expenses. This is just like life, you may have enough money to buy an investment, then your car breaks down and you need to pay to fix it or buy a new one. Your house may be out of date and you would like to remodel it. All these things take away from money that could be invested. So, when you are playing, you or some people you are playing with may get frustrated and say they cannot get out of the rat race and they never want to play the game again. Then you can remind them or yourself, that is the point of the game! It teaches you, if you spend your money negligently, you may never get out of the rat race. However, if you spend your money with a purpose, you will get to the fast track! This allows you to focus on growing your income and not worrying about your liabilities/expenses because you are already living for free. If your monthly passive income surpasses your monthly expenses, you are financially free. If you have a goal to be financially free, I encourage you to think about this game the next time you go to purchase something that is not a necessary.
This game was an eye opener for Sam and I, we realized it does not matter the amount of money you make but what you do with your money. You can make $2,000 a month in income but if you only have expenses of $1,000, you can save a $1,000 a month to invest. Then all you have to do, is get your passive income over $1,000 a month and you will be financially free. You will no longer have to work to survive, you can then work because you want to! Allowing you to invest your extra income to grow your wealth or simply to enjoy yourself.
How I have implemented this in my life so far.
- I own a business with my business partner Ryan. Sam is the regional manager of our business and is helping us set up systems, to make the business self ran. Once the business is running itself, Ryan and I would then be receiving passive income from the investment of starting and owning our business.
- I have a couple rental properties with Ryan that we rent to our business, this allows us to get passive income from these properties. We are working on having 4 properties in our name by the end of 2021 that we rent to our business.
- Sam and I have a roommate who pays us monthly rent. This is $400 a month in passive income, plus utilities split 3 ways.
- Sam and I will be working on renovating and renting out real estate in years to come.
- Sam and I track our expenses monthly and make sure they stay low, so we are not living outside of our means. This will help us become financially free faster.
I encourage everyone to try and be financially free. Think of how nice it would be to not have to work to survive but work because you want to!
I hope this gives everyone a new perspective and go out and buy from the link below “Cashflow Get Out of the Rat Race” if you want to have some fun!
Your life Tutor